Sneve v. Schwartz

• Decision Date: 05 March 1913
• Docket Number: 81912
• Citation: 141 N.W. 348,25 N.D. 287
• Court: North Dakota Supreme Court

141 N.W. 348

25 N.D. 287

JOHN S. SNEVE et al. v. GEORGE S. SCHWARTZ et al

No. 81912

Supreme Court of North Dakota

March 5, 1913

Rehearing denied May 7, 1913.

Appeal from the District Court for Ward County, Leighton, J.

Affirmed.

F. B Lambert and Geo. A. McGee, for appellants.

No disaffirmance of the alleged fraudulent contract or notice rescission has ever been made. To be relieved from fraud, one must rescind. N.D. Rev. Codes, § 5380; Sonnesyn v Akin, 14 N.D. 248, 104 N.W. 1026; Higby v Whittaker, 8 Ohio 198; Walters v. Miller, 10 Iowa 427; Melton v. Smith, 65 Mo. 315.

The intention of rescind must be made evident. Mullin v. Bloomer, 11 Iowa 360; American Wine Co. v. Brasher Bros. (C. C.) 13 F. 595; Carney v. Newberry, 24 Ill. 203; Gaty v. Sack, 19 Mo.App. 470; Davis v. Read (C. C.) 37 F. 418; Grymes v. Sanders, 93 U.S. 55, 23 L.Ed. 798, 10 Mor. Min. Rep. 445; Ayres v. Mitchell, 3 Smedes & M. 683; Lawrence v. Dale, 3 Johns. Ch. 23.

Consideration paid cannot be recovered unless demand has been made for the money paid, or property delivered, before suit is brought. Weeks v. Robie, 42 N.H. 316; Swazey v. Choate Mfg. Co. 48 N.H. 200; I. L. Corse & Co. v. Minnesota Grain Co. 94 Minn. 331, 102 N.W. 728.

Until contract is rescinded, an action to recover payments cannot be maintained. Herman v. Gray, 79 Wis. 182, 48 N.W. 113; Ludington v. Patton, 111 Wis. 208, 86 N.W. 571; Potter v. Taggart, 54 Wis. 395, 11 N.W. 678; Bostwick v. Mutual L. Ins. Co. 116 Wis. 392, 67 L.R.A. 705, 89 N.W. 538, 92 N.W. 246.

Until rescission, a voidable sale remains such, with voidable title in the purchaser. Mechem, Sales, §§ 148, 889, 892, 901, 907; Donaldson v. Farwell, 93 U.S. 631, 23 L.Ed. 993, note; Fechheimer v. Baum, 43 F. 719, 2 L.R.A. 153, and note; Morrow Shoe Mfg. Co. v. New England Shoe Co. 24 L.R.A. 417, 6 C. C. A. 508, 18 U.S. App. 256, 57 F. 685; King v. Jacobson, 35 N.Y. S. R. 808, 12 N.Y.S. 584; 8 Rose's Notes (U.S.) 1024; 23 Century Dig. col. 174; 17 Decen. Dig. 42-44; Ditton v. Purcell, 21 N.D. 648, 36 L.R.A.(N.S.) 149, 132 N.W. 347.

The action should be instituted, or notice given, promptly upon the discovery of fraud. N.D. Rev. Codes, § 5380; 2 Pom. Eq. Jur. § 897.

An allegation of mental weakness is not an allegation of insanity. N.D. Rev. Codes, § 7409; S.D. Civ. Code 1905, § 13; 8 Words & Phrases, 7213; Nelson v. Thompson, 16 N.D. 295, 112 N.W. 1058; Batman v. Snoddy, 132 Ind. 480, 32 N.E. 327; 31 Cyc. 59; 9 Cyc. 459; Sandels & H. Dig. (Ark.) § 7217.

An allegation as to title to real property cannot be made on information and belief. Hathaway v. Baldwin, 17 Wis. 616; State ex rel. Kennedy v. McGarry, 21 Wis. 500; Union Lumbering Co. v. Chippewa County, 47 Wis. 245, 2 N.W. 281; Steinberg v. Saltzman, 130 Wis. 419, 110 N.W. 198.

It is necessary to allege intention to deceive, and that representations were known to be false. Words of scienter are necessary. Arthur v. Griswold, 55 N.Y. 400, 7 Mor. Min. Rep. 46; Brackett v. Griswold, 112 N.Y. 454, 20 N.E. 376; Southern Development Co. v. Silva, 125 U.S. 248, 31 L.Ed. 678, 8 S.Ct. 881, 15 Mor. Min. Rep. 435; Barnett v. Stanton, 2 Ala. 181; McDonald v. Trafton, 15 Me. 225.

A false representation must be knowingly made. Southern Development Co. v. Silva, 125 U.S. 248, 31 L.Ed. 679, 8 S.Ct. 881, 15 Mor. Min. Rep. 435; 5 Am. & Eng. Enc. Law, 320; Oberlander v. Spiess, 45 N.Y. 177; Meyer v. Amidon, 45 N.Y. 169; Marsh v. Falker, 40 N.Y. 565; Chester v. Comstock, 40 N.Y. 576, note; Duffany v. Ferguson, 66 N.Y. 484; Wakeman v. Dalley, 51 N.Y. 27, 10 Am. Rep. 551; McIntyre v. Buell, 132 N.Y. 192, 30 N.E. 396; Daly v. Wise, 132 N.Y. 306, 16 L.R.A. 236, 30 N.E. 837; Kelly v. Gould, 47 N.Y.S. 5, 19 N.Y.S. 349, affirmed in 141 N.Y. 596, 36 N.E. 320; Kerr, Fr. p. 382.

The gravamen of the action is actual fraud. Kountze v. Kennedy, 147 N.Y. 124, 29 L.R.A. 360, 49 Am. St. Rep. 651, 41 N.E. 414; Maxwell, Pl. p. 194.

In an action of deceit, it is necessary to allege a scienter. (Ala. 1889) Clark v. Dunham Lumber Co. 86 Ala. 220, 5 So. 560; (Fla. 1887) Williams v. McFadden, 23 Fla. 143, 11 Am. St. Rep. 345, 1 So. 618; (Ga. 1858) Wooten v. Callahan, 26 Ga. 366; (1861) 32 Ga. 382; (Miss. 1860) Mizell v. Sims, 39 Miss. 331; (Mo. 1892) Fenwick v. Bowling, 50 Mo.App. 516; (N.Y. 1858) Mabey v. Adams, 3 Bosw. 346; 1895 Thomas v. Snyder, 77 Hun, 365, 28 N.Y.S. 877.

It must clearly appear that the complaining party relied upon the representations made, and acted upon them. Johnson v. Kindred State Bank, 12 N.D. 336, 96 N.W. 588; 23 Century Dig. 1690.

Damages must be alleged and proved. Maxwell, Code Pl. 16; 20 Cyc. 108; Marshall-McCartney Co. v. Halloran, 15 N.D. 71, 106 N.W. 293; First Nat. Bank v. North, 2 S.D. 480, 51 N.W. 96; Hayrock v. Surerus, 9 N.D. 28, 81 N.W. 36; Nelson v. Grondahl, 12 N.D. 133, 96 N.W. 299.

All the elements of actionable fraud must be alleged. 31 Cyc. 56; 16 Cyc. 231; 6 Cyc. 325, 326; Russell v. Meyer, 7 N.D. 335, 47 L.R.A. 637, 75 N.W. 262.

Noble, Blood, & Adamson, for respondents.

The plaintiffs received nothing, and it is therefore impossible for them to retain anything, or to tender anything back. The allegations of notice and disaffirmance are sufficient. Zebley v. Farmer's Loan & T. Co. 139 N.Y. 461, 34 N.E. 1067; Warren v. Providence Tool Co. 19 R. I. 360, 3 A. 876; King v. Zekle, 53 Fla. 940, 43 So. 586; Porter v. Armour & Co. 241 Ill. 145, 89 N.E. 356; Ballard v. Golob, 34 Colo. 417, 83 P. 376.

The allegations of mental weakness are sufficient. Gavitt v. Moulton, 119 Wis. 35, 96 N.W. 395; Robinson v. Robinson, 203 Pa. 400, 53 A. 253; Re Hess, 48 Minn. 504, 31 Am. St. Rep. 665, 51 N.W. 614; 9 Cyc. 460.

This action can be maintained for the recovery of the purchase price. Worley v. Nethercott, 91 Cal. 512, 25 Am. St. Rep. 209, 27 P. 767; Mims v. Cobbs, 110 Ala. 577, 18 So. 309; Haile v. Smith, 128 Cal. 415, 60 P. 1032.

BURKE, J. GOSS, J., took no part in this decision.

OPINION

BURKE, J.

The plaintiffs, husband and wife, were on the 29th day of September, 1909, the owners of a half section of land in Ward county. Upon that date they entered into the following written contract with the defendants: ". . . the parties of the first part, for and in consideration of the parties of the second part, transferring by good and sufficient warranty deed, as shown by an abstract of title to be furnished free and clear of all encumbrance, of all the following described real estate [describing a 5-acre tract and also a certain block 11], and the one-half interest in the following described nursery stock [describing over 100,000 trees and shrubs]. The parties of the second part, for and in consideration of the transfer of said property by the parties of the second part, to convey to the parties of the second part by good and sufficient warranty deed, free and clear of all encumbrance save and except a mortgage of $ 2,100, and abstract of title to said property to be furnished [describing the said farm]. Parties of the first part hereby agree to pay all interest up to and including December 1, 1909, on said $ 2,100 mortgage. It is hereby agreed between the parties that each party to this contract shall pay the 1909 taxes on the property which they agree to convey by this contract. The parties to this contract have this day made and executed deeds in accordance with this contract, except the block 11 heretofore described; deed to same to be delivered November 15, 1909. Said deeds to be deposited in the Second National Bank of Minot in escrow, until such time as the abstract of title to the various pieces of real estate are filed and an opportunity is given the parties herein to examine the same." (Signed by the plaintiffs and defendants.)

On the 29th of December, 1909, this suit was instituted. The complaint is too long to be set out in full in this opinion and we will merely state its contents briefly. First, it is alleged that the plaintiffs owned the farm land described. Next, the written contract is set up, and that the said farm was worth the sum of $ 10,000. It is then alleged that the plaintiff, John S. Sneve was of unsound mind, which fact was known to the defendants. It is further alleged that false and fraudulent representations were made by the defendants to plaintiffs, as follows: "That the defendants alleged that they were the owners of the 5-acre tract and said block 11, and a half interest in the said nursery stock, which representations were untrue. Plaintiffs alleged on information and belief that the defendants never owned any of said property. It is further alleged that the defendants represented that they had done the business in the said nursery line to the amount of $ 20,000 in the previous year; that they had a contract with the city of Minot to furnish to such city all trees and shrubs that such city might need, and that they had a contract, or practically so, with the Soo Railroad Company, whereby they were to furnish said railway with all the trees and shrubs that it should need between the city of Minneapolis and the Rocky Mountains. It is further alleged that defendants represented that the nursery stock was worth the sum of $ 10,000. The complaint then alleges that all of these representations were false and made to induce the plaintiffs to enter into said contract, and that had it not been for the mental condition of said John S. Sneve the contracts would not have been made. It is further alleged that the defendants never executed deeds to the property upon their part to be conveyed, or deposited the same in escrow, but that the plaintiffs executed the deed to their said farm in favor of the defendants, but that said deed was not deposited in escrow, but fell into the hands of the defendants, by whom it was recorded,...